TA: AMRN - daily chart. Track and Field Days - At today's Hurdles Event | Biotech Message Board Posts

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Msg  28575 of 33213  at  11/13/2019 12:11:47 PM  by

berkstump2


 In response to msg 28559 by  berkstump2
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Re: TA: AMRN - daily chart. Track and Field Days - At today's Hurdles Event

 
So far today, the daily candle, with its small body and very long tail, would
be thought of as a "Hammer" by the average chart watcher.
 
But guess what ?
It ain't.
 
Like Real Estate, it's Location, Location, Location.
Looks like a Hammer, but it's Location says its a "Hanging Man."
 
Immediately, the average chart watcher will run over to investopedia and wikipedia
to get their  modern day version of 'Cliff Notes.'
 
OMG, a trend reversal is near at hand. The sky will be falling. Batten down the Hatches.  Right ?
 
Now, let's visit a well-known chart freak of the highest order, Tom Bulkowski -
Here he is on the 'Hanging Man' candle :
 
---------------------------------------------------------------------------------------------------------------- 
 
"The hanging man is probably one of the better known candlestick patterns, but it does not work as many expect. Candle theory says it acts as a bearish reversal of the prevailing price trend, but my tests show that it is really a bullish continuation 59% of the time. Of course, that is what I call "near random." The hanging man appears frequently in a historical price series, but the trend after the breakout is dismal, ranking 87 out of 103 candle patterns where 1 is best." 
 

Hanging Man: Discussion

The hanging man candlestick is a popular one, but one that shows lousy performance. In theory, it is supposed to be a bearish reversal but it actually is a bullish continuation pattern 59% of the time. The best performance that it can muster is after a downward breakout in a bear market. Price drops an average of 3.60% in 10 days, ranking it 59 for performance. That is just mid list. Outstanding performance would be a move of 6% or more.

Hanging Man: Identification Guidelines

Top of page More

Hanging Man: Three Trading Tidbits

If you want a few bones from my Encyclopedia of candlestick charts book, here are three to chew on. The pages refer to the book where the tips appear.

  1. Hanging man candles that appear within a third of the yearly low perform best -- page 368.
  2. Hanging man candles taller than the median show price that moves 50% farther after the breakout than those shorter than the median -- page 368.
  3. Hanging man candlesticks within a third of the yearly high tend to act as continuations of the primary price trend -- page 370.
 


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Msg # Subject Author Recs Date Posted
28576 Re: TA: AMRN - daily chart. Track and Field Days - Why you little Shape-shifter. berkstump2 8 11/13/2019 4:41:37 PM






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